Reagan talks arms race, but Block pushes 'normal' trade

Two days after President Reagan launched a fresh verbal attack on the Soviet Union here, Secretary of Agriculture John R. Block delivered a very different message.

Speaking to the United Brotherhood of Carpenters and Joiners of America on Sept. 3, Mr. Reagan warned that if the Soviets continue their current military buildup, "they will be in an arms race which they can't win."

Mr. Block, speaking to 3,000 Midwestern farmers in Chicago Sept. 5, said that the US Department of Agriculture (USDA) is working for the swiftest possible "complete normalization of trade" with the Soviet Union.

Then, in what he called a major step toward repairing damage caused by the Carter administration's 16-month embargo on grain sales to the Soviets, Block announced the USDA will head a US government team meeting with Soviet officials in Moscow Sept. 30 and Oct. 1 to discuss grain sales. Block said he hopes the Soviets will agree to purchase at least an extra 10 million metric tons of US grain for the year beginning in October. This would be in addition to the 8 million tons already approved under the extended US-Soviet grain sales agreement.

Block added that he hopes in later talks to draw up a new long-term grains agreement with a ceiling well above the 8 million tons of the present agreement which expires Sept. 30, 1982.

Block denied his aggressive grain-salesmanship conflicts with overall administration policy. He said it is "absolutely essential that we insist that the Soviet Union behave internationally, but I don't think that has to affect how much food we sell to them." He added that whatever the Soviets spend on US food is "that much less for military expenditure."

Block's main reasons for selling grain are economic. Because of the record US wheat harvest, with bumper corn and soybean harvests expected soon, Block said, "We are looking for markets . . . . We have told them [the Soviets] to come in and buy all at once." He said he also is urging the Chinese to increase their US grain purchases well beyond the 9 million tons anticipated in the current US-Chinese grains agreement.

The Soviet response to the predicted US surplus has been to hold back, hoping US grain prices will continue to drop. To help the drop, the Soviets are claiming their own grain harvest won't be as poor as the USDA reports indicate. If the Soviets harvest more than the 185 million tons predicted by US experts, they would not need to import the full 40 million tons which the USDA now expects the Soviets to need in the coming year. If the Soviets do import 40 million tons, the US hopes to supply 20, with the rest coming mainly from Argentina, Australia, and Canada.

For Block, this is no time to haggle over low prices for US grain or throw up political obstacles to export sales. His view is that the US should sell all the grain it can as quickly as possible to the Soviets. One reason for his hurry may be that he tried to sell surplus butter to the Soviets but was blocked by protests from the State Department and Congress -- and so sold to New Zealand to avoid selling below-cost butter directly to the Soviets.

This time Block is confident that he has full support from the President and the Cabinet for exporting grain. They understand the economic importance of grain sales, Block insists. As well, said Block with emphasis which brought a good laugh from his audience of farmers, President Reagan "really thinks he is a farmer and rancher and likes to talk about it."

Yet Block can count on more than just sympathy from rancher Reagan and the Cabinet members with farming experience: Commerce Secretary Malcolm Baldrige, Transportation Secretary Drew Lewis, Education Secretary Terrel Bell, and budget director David A. Stockman. With current world grain demand slack, the alternative to boosting farm exports is propping up low farm incomes with government support programs. This costly alternative has little support in a Cabinet trying frantically to cut spending wherever possible.

Block reminded his Chicago audience that farmers traditionally do better without government supports. "I don't believe farmers like direct payments out of the federal treasury," he said to a burst of applause. "We want payments out of the marketplace . . . We want economic recovery, but not at the taxpayer's expense."

Rock-bottom wheat prices have forced Block into supporting a government set-aside program for wheat. If Congress approves, this will limit the acres planted to wheat by 15 percent. "The reduced-acreage program," Block says, "will strengthen prices by reducing the 1982-83 marketing year supplies."

Explaining his abandonment of free-market principles for wheat and possibly for corn, Block said that "I dislike set-asides, but I dislike low farm prices even more." He added that one reason for this intervention, ironically, is the Reagan administration's success on the economic front. The dollar's gain in value against other currencies, he said, "has hurt our export potential."

So one way to help the Reagan economic recovery program succeed, for hog farmer Block, is to butter up the Soviets as very important customers -- even if this seems to conflict with President Reagan's own hard-line stance toward the Soviet Union. Yet this is not a matter of "policy" differences within the Reagan administration, says Block, just "differences on timing."